A senior executive of a robotics company once envied the policy and financial support provided by the government at the beginning of the development of the new energy industry. He said, "If only the robotics industry had so much policy support

This situation has changed to this day.

For value-added tax export tax refunds, the photovoltaic tax refund will be reduced to zero from April 2026, and the battery tax refund will be reduced to 6% by the end of June and will be reduced to zero from next year; Starting from September 2026, the consumption tax on lithium-ion, nickel hydrogen, lithium primary, mercury free primary batteries, and all vanadium flow batteries will be gradually restored, and photovoltaic cells will follow suit from April 2027.

In the past decade, the "new three types" (electric manned vehicles, lithium batteries, and solar cells) have enjoyed a large number of tax incentives: export tax rebate benefits, long-term exemption from consumption tax, continuous reduction and exemption of purchase tax for new energy vehicles, extended vehicle and vessel tax incentives for many years, as well as large-scale purchase subsidies and "trade in" subsidies.

Nowadays, the "new three types" of taxation are gradually returning to normalcy.

Li Hua, director of the Tax Economics Research Center at Shandong University, stated in an interview with the Economic Observer that the adjustment of the "new three types" of taxation is essentially a systematic calibration of the country's governance capacity. With the completion of the historical mission of industrial cultivation, the policy focus is shifting from inclusive support to differentiated and precise adjustment. From an internal logic perspective, China's tax policy adjustments for photovoltaics, lithium batteries, and new energy vehicles are based on two levels: firstly, internally, it is an inevitable choice for the industry to shift from scale expansion to quality improvement and tax equity after establishing its global leading position in terms of industry scale; Secondly, externally, it echoes the macro rhythm of major global economies gradually withdrawing from universal subsidies for new energy and strengthening green tax regulation.

In sync with the retreat of domestic policies, global tax and trade governance is undergoing structural reshaping: the OECD (Organization for Economic Cooperation and Development) is promoting the implementation of a dual pillar global minimum tax, the US Inflation Reduction Act sets localized procurement thresholds, the EU has introduced a carbon border adjustment mechanism, and imposed countervailing duties on Chinese electric vehicles. Major economies are rethinking the boundaries between industrial subsidies, tax incentives, and international market competition.

Article 33 of the Implementation Regulations of the Value Added Tax Law of the People's Republic of China, promulgated in December 2025, proposes that the financial and tax authorities of the State Council should timely study and evaluate the effectiveness of the implementation of value-added tax preferential policies, and promptly request the State Council to adjust and improve preferential policies that no longer meet the needs of national economic and social development.

Several researchers believe that this adjustment of tax incentives is also an important measure to promote the construction of an "efficient market" and a "proactive government" under the requirements of a unified large market. The "Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five Year Plan for National Economic and Social Development" passed at the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China proposes to combine effective markets with proactive governments, and the optimization of the "New Three Types" tax policy is the concrete implementation of this governance approach in emerging industries.

Ye Yongqing, a partner at Anli Law Firm, believes that this means that the certainty of the future tax environment comes from transparent and statutory rules, rather than the permanent preferential treatment. Rational long-term investment decisions of enterprises should take tax neutrality as the benchmark scenario, consider any tax incentives as temporary enhancements with clear terms and exit conditions, and fully consider the variable impact of policy changes rather than permanent assets that can be capitalized indefinitely.

The return of the "new three types" of taxation to normal does not mean that tax policies do not support emerging industries. In fact, innovative behavior in industries is still supported by fiscal and tax policies. For example, from September 1, 2026 to December 31, 2028, perovskite cells, stacked cells, and gallium arsenide cells in sodium ion batteries, solid-state batteries, fuel cells, and photovoltaic cells will be exempt from consumption tax.

Adjust

In the past decade, the "New Three Policies" have enjoyed more preferential policies.

On July 28, 2025, the State Council Information Office held a series of themed press conferences on "Completing the 14th Five Year Plan with High Quality". At that time, Hu Jinglin, the director of the State Administration of Taxation, stated that emerging industries such as the "new three types" had a good development momentum, but the overall scale of tax revenue was relatively small, and there were many preferential policies enjoyed. At present, their role in driving tax growth is not significant enough.

On the export side, lithium batteries and photovoltaic modules have long enjoyed value-added tax export rebates, which is a key lever supporting their global price competitiveness. On the production side, the consumption tax on batteries has been exempted for "emerging products" such as lithium batteries and photovoltaic cells since they were included in the scope of taxation in 2015, and the exemption lasts for more than ten years. On the consumer side, the purchase tax for new energy vehicles has been exempted since 2014 and has been extended multiple times. The vehicle and vessel tax is also exempt from taxes for new energy commercial vehicles. This preferential chain from production to consumption constitutes a complete policy dividend channel for the "new three types" to move from industrial cultivation to consumer marketization.

Over the past decade, it has been a golden period for the "new three types" to enjoy inclusive support. Li Hua believes that the rapid rise of the "new three types" industries in the local market and their global expansion can be attributed to the support of fiscal and tax policies. Over the past decade, policy combinations have supported early demand, activated industrial chain investment, and opened up overseas price space, from the reduction and exemption of purchase tax and vehicle and vessel tax on the consumer side to electricity price subsidies on the production side, and then to tax refund support on the export side.

For example, in the new energy vehicle industry, China has exempted the purchase of new energy vehicles from vehicle purchase tax since September 1, 2014. This policy has been extended three times in 2017, 2020, and 2022 until December 31, 2023. By the end of 2022, the cumulative tax-free scale of the above policies will exceed 200 billion yuan, and it is expected that the tax-free amount will exceed 115 billion yuan in 2023

Xu Hongcai, the then Deputy Minister of Finance, stated that in addition to exempting new energy vehicles from vehicle purchase tax, the country also exempted new energy vehicles from vehicle and vessel tax, and did not impose consumption tax on pure electric vehicles.

The financial director of a lithium battery company with cylindrical batteries as its main business and about half of its products exported, told the Economic Observer that financial and tax support policies have played a crucial role in promoting the development of the lithium battery industry. Taking national subsidies as an example, although the nominal subsidy is for new energy vehicles, the core of the industry chain is always the battery, and the real focus of competition is battery performance. The existence of national subsidies has directly opened up the market demand for batteries, forming a strong driving force on the consumer side. If it weren't for this round of subsidies to support the bottom, the lithium battery industry would probably have already fallen into a low price "internal competition".

The person in charge believes that with the gradual decline of various preferential policies, battery companies have truly entered the market-oriented stage of survival of the fittest. A clear evidence is that five or six years ago, there were almost no concepts such as solid-state batteries, semi-solid state batteries, sodium ion batteries, etc. in the industry. It was precisely after the subsidy was withdrawn that technological iteration significantly accelerated. Enterprises are forced to shift towards market demand orientation and technological innovation track, and while industry competition intensifies, product performance has also achieved sustained breakthroughs. Looking back, the national subsidy stage essentially played the role of a "cultivation period", at least helping the industry build production capacity and enabling general battery products to achieve large-scale production.

From the perspective of industrial scale and competitiveness, the "new three types" have already overcome their youthful vigor and fully entered the mature stage of marketization.

Taking the photovoltaic industry as an example, by the end of 2025, the global production capacity of polycrystalline silicon, silicon wafers, solar cells, and modules in China will account for 96%, 96.2%, 91.3%, and 80.1% respectively. According to the latest 2025 global installed capacity statistics of electric and hybrid vehicle batteries released by SNE Research in South Korea, the share of Chinese companies has rapidly risen from less than 50% in 2021 to 70.4% in 2025.

This also means that the logical basis for continuing to use inclusive fiscal and tax incentives has changed. Ye Yongqing stated that for the "new three types", they are already mature industries, and their future development perspective is more focused on how to gradually digest the cost changes brought about by policy adjustments through enhancing competitiveness, rather than continuing to expect strong policy support.

This is not the first time in China that fiscal and tax policies have been adjusted for mature industries. Looking back at the past, the phased fiscal subsidies for home appliances and automobiles going to rural areas were terminated on schedule, and the policy of immediate collection and refund of value-added tax for nuclear power and wind power was gradually cleared, all following the same development logic: in the stage of industrial cultivation, financial and tax policies were used to support industrial growth, and after the industry formed a scale advantage and had market competitiveness, universal support was gradually withdrawn to promote the return of the tax system to fairness and unity.

China's fiscal and tax adjustments to the "new three types" are not isolated actions, but also part of the global industrial policy shift.

The OECD's "2026 Tax Policy Reform" mentions that some countries have reduced their previous value-added tax incentives related to low-carbon transformation; Overall, the transportation sector maintains tax incentives for electric vehicles, but some countries are gradually reducing these incentives.

The United States uses the IRA (Inflation Reduction Act) to link subsidies with localization. The EU uses the CBAM (Carbon Border Adjustment Mechanism) to convert the implicit carbon emissions of imported goods into quantifiable border costs, and then incorporates carbon footprint, battery passport, and recycling ratio into market access conditions through the New Battery Act. At the end of October 2024, the European Union imposed a five-year countervailing duty on Chinese pure electric passenger vehicles, with an additional tax rate of 7.8% to 35.3% on top of the 10% base tariff, resulting in a maximum comprehensive tax burden of 45.3%.

China's policy adjustments towards the "new three types" are highly aligned with the global trend mentioned above: phased decline, return to tax neutrality, leave a window period for cutting-edge technologies, and compress low-priced export space.

This also means that major economies around the world are synchronously promoting the return of the new energy industry to a market-oriented operating track.

Li Hua believes that currently, countries are rebalancing the scale between industrial subsidies, tax incentives, and global competition. Behind this is a global governance approach that aims to streamline existing rules while leaving room for innovation.

Intention

In Li Hua's view, the current round of fiscal and tax policy adjustments targeting the "new three types" have multiple backgrounds and intentions.

Firstly, the cancellation of photovoltaic tax rebates and the reduction of battery tax rebates have directly cut off the channel of "domestic financial subsidies for low-priced exports". Enterprises used to rely on tax refunds to maintain low price competition, but now this path is no longer viable and must shift towards relying on efficiency and innovation to establish a foothold. In her view, this is essentially a shift in policy focus: from encouraging scale expansion in the past to now forcing quality improvement and eliminating inefficient production capacity.

Ye Yongqing believes that when the supply side has become absolutely dominant, continuing to subsidize exports with fiscal funds will lead to a decrease in marginal effects and is more likely to trigger trade frictions.

Li Hua believes that at the current stage, continuing to enjoy preferential policies not only increases the risk of low price competition and profit outflow, but also attracts anti subsidy investigations in the international market.

Securities firms generally define the adjustment of the "new three types" tax policy as a "mild supply side tool against internal competition":

Xingzheng Macro proposes that tax adjustment itself is also one of the mild measures to combat internal competition. For the battery and photovoltaic industries, taxation itself is a relatively mild means of supply side adjustment, and the increased financial and tax costs can be transferred externally, that is, transmitted to the export link through the industrial chain, achieving the goal of "finding increment externally and promoting reform internally"; If it is difficult to transfer the cost and the enterprise itself cannot digest this part of the cost, it may consider exiting the market, which is also one of the mild measures to combat internal competition. Similarly, in January 2026, policies were introduced to cancel or reduce export tax rebates for the photovoltaic and lithium battery industries.

Huachuang Securities' research report pointed out that the signal significance of this adjustment is clear: first, accelerating the optimization of consumption tax, second, rationalizing macro tax burden, and third, deepening the "anti internal competition" in the midstream.

It can be seen that policy retreat is only one part of the anti involution combination, and cannot cure the supply-demand imbalance itself.

The financial director of the aforementioned lithium battery company believes that this policy adjustment has significantly reduced the survival space for pure low-priced competitive enterprises that have long relied on existing orders and engaged in price wars based on volume. Lacking market competitiveness, elimination is inevitable, and such enterprises must be eliminated. Under pressure, there are only two ways to survive: either reduce costs and increase efficiency, or rely on technological innovation to achieve iterative upgrades. This is both an 'anti internal competition' and a push for the industry to continue moving forward.

More noteworthy is the spillover of tax rebate dividends. The relevant person in charge of the China Photovoltaic Industry Association publicly stated that some enterprises not only engage in uncontrolled low price competition during the export process, but also convert export tax rebates into external bargaining space, which not only causes profit loss for domestic enterprises, but also increases the risk of international trade frictions such as anti subsidy and anti-dumping in China's photovoltaic industry.

The adjustment of tax policies is also conducive to reducing such "dividend spillover" behavior.

In Li Hua's view, the second intention of policy adjustments is to achieve precise governance through the layered design of consumption tax: to restore taxation on mature production capacity and retain tax-free windows for cutting-edge technologies.

This adjustment will gradually restore a consumption tax of 2% -4% on mature production capacity such as lithium batteries and photovoltaic cells, while leaving a tax-free window for cutting-edge technologies such as sodium batteries, solid-state batteries, and perovskites until the end of 2028.

Li Hua believes that this not only fulfills the green regulatory function of consumption tax, suppresses the disorderly expansion of low-end production capacity, but also leaves sufficient policy space for technological iteration.

The third level of meaning is to move from "policy driven" to "market driven".

Li Hua said that the purchase tax on new energy vehicles was reduced by half from full exemption, and the preferential tax on vehicles and ships was gradually withdrawn, reflecting that the policy orientation shifted from inclusive support to differentiated and precise adjustment. This is not about tightening industry support, but promoting the return of tax rules to fairness and uniformity, forcing car companies to break free from policy dependence and participate in market competition based on product competitiveness.

In addition, this is also a continuation of the system of more than 80 value-added tax preferential policies standardized by the finance and taxation departments after the implementation of the value-added tax law in 2026. Ye Yongqing stated that the "Implementation Regulations of the Value Added Tax Law of the People's Republic of China" clearly require that "preferential policies that no longer meet the needs of national economic and social development should be promptly adjusted by the State Council. This means that the existence of future tax incentives needs to pass a necessity test within the legal framework of taxation.

In addition, this institutional adjustment will also provide stronger financial support.

Securities calculations show that the cancellation of photovoltaic tax rebates and the reduction of battery tax rebates can alleviate fiscal tax rebate expenditures by approximately 67 billion yuan in 2026, and increase to approximately 120 billion yuan after battery tax rebates return to zero in 2027; After the consumption tax for batteries and photovoltaic cells is restored, the theoretical tax burden of the industry is estimated to be in the tens of billions to hundreds of billions based on a static estimate of 4%. However, the export sector is eligible for consumption tax refund (exemption) and continuous production can be deducted. The actual new fiscal revenue will be significantly lower than the static value. Because the main goals of the policy are still to combat internal competition, prevent spillover, and promote fairness.

Adapt

The standardization and cancellation of financial and tax support policies ultimately fall at the enterprise level, and it is necessary to face the issue of how much cost is added and how to digest the cost.

The financial manager mentioned above calculated in the economic observation report that the export tax rebate has been reduced from 9% to 6%, and three points have been basically transferred to the company's product costs; Reduce from 6% to 0% in 2027, and add another 6%. In terms of consumption tax, it will be levied at 2% in September this year and increased to 4% in September next year. Export taxes can be refunded. The combination of the two items resulted in a 13% increase in costs on the company's consolidated account.

The industry was already very competitive, but suddenly the tax refund disappeared and the consumption tax was added, which had a great impact on lithium battery manufacturing enterprises. The person in charge used industry profits as a reference and said that the average profit margin of the entire lithium battery industry was "about 20%". He calculated based on the extreme assumption that the company's internal and external sales are evenly distributed, and the selling price and upstream materials remain unchanged. The conclusion is that after tax returns to normal, the company's profits will decrease by about 20%. This means that once the consumption tax is implemented, the already meager profit margin of the industry will be further significantly compressed.

However, the current decline in upstream prices has provided space for the industry. The person in charge told reporters that the price of the main raw material lithium carbonate has dropped from 180000 yuan/ton at the beginning of the year to 120000 to 130000 yuan/ton, a decrease of 30%. Lithium carbonate accounts for about 35% of the total battery cost. The price correction of upstream materials has eased the pressure on the production side of enterprises.

According to the reporter's understanding, leading companies such as EVE Energy (300014. SZ) and Lishen have issued price adjustment notices after the consumption tax announcement, mainly transferring costs downstream.

The financial manager mentioned above stated that there is a significant asymmetry in the price transmission of consumption tax in China. The sensitivity of customers to the current 1% to 2% tax increase is relatively low, and companies can still cope by digesting it themselves or raising prices slightly; But if the tax rate rises to 4%, it will inevitably need to be transmitted downstream in the industrial chain. The situation at the export end is more complex, and customers find it difficult to accept a price increase of 6% to 9% at once. The reality is that companies often absorb a portion of the costs themselves and gradually pass on the remaining portion to overseas customers.

This year and next year, the gross profit and profit margins of many companies in the industry are expected to decline slightly, "said the financial manager.

The financial manager mentioned above introduced the company's response strategy to the reporter: starting from the second half of the year, the company will shift its focus to the research and production of larger cylindrical batteries. The logic is that larger sized batteries produce higher output per hour, which can dilute depreciation and labor costs. He emphasized that this research and development direction was originally the overall strategic plan of the company, but it coincided with external policy changes such as the introduction of consumption tax and the reduction of export tax rebates, which objectively accelerated the pace of transformation. Although the launch of new products requires a period of adaptation, as a manufacturer with over 20 years of battery manufacturing experience, the company is confident in the maturity of its new products.

In the past decade, the 'New Three' have grown up under the support of policies; starting from this year, they will stand firm on their own in markets without support, "said the financial manager.

(Author Du Tao)